EIB: SMEs maintain their growth orientation despite increased uncertainty

With the war in Ukraine affecting the already strained international markets of energy and raw materials as well as the supply chains, the SME sector continues to surprise positively by showing remarkable resilience. According to a recent survey by the EIB Δι’s Directorate of Economic Analysis, while the blow to Greek companies is proving to be of great breadth and depth, their financial image remains sound and their development plans are active.

In particular, the EIB survey of a sample of 600 companies (April-May) highlights the growing uncertainty affecting the SME sector, with 41% reporting a direct impact from the war (and ½ defining it as severe) .

Standing out as the main channel pressure on prices and adequacy of raw materialsGreek companies are burdened both due to dependence on Russian and Ukrainian imports but mainly due to the wider turmoil that prevails in the international markets of energy and raw materials.

In industry level, the blow is more severe in industry and trade, with ½ of the respective SMEs declaring that they are directly exposed to the current situation (compared to 25-30% in services and constructions). Under these conditions, the SME Confidence Index led to a drop of 11 points compared to the previous six months, with the concern being mainly in the fluid conditions that prevail today.

Despite the above signs of deterioration of SME expectations, it is important that the situation at this stage seems manageable, given that:

-O Confidence Index (despite the decline) remains on positive ground for all business sizes, signaling the maintenance of expansion strategies for the majority of the sector.

– The percentage of SMEs with strong liquidity problems remains at a record low of 9%, while at the same time the weak part that is in a state of survival remains close to 15% (compared to 35% at the peak of the pandemic and 45% at the height of the crisis).

Acrobatic in a delicate balance of liquidity resilience and crisis depth, SMEs manage to stay on a growth trajectory in both the short and medium term planning horizon. Specifically, based on our research:

– For the next semester, the recruitment intention is increased, as the ¼ sector plans to proceed with recruitment – a percentage significantly higher than last year’s data (+6 percentage points). Thus, it is confirmed that liquidity defenses remain active and in support of recent measures to address rising energy costs.

-For the next five years, sales dynamics are estimated to be strengthened by 2% per year (compared to the previous five years), as both the percentage of growth SMEs and the intensity of recovery at company level will be higher. This optimistic view of companies partly reflects the opportunities opened up through the Development Fund and other related investment programs.

See the full Survey here